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What Apple Needs To Be Worth A Trillion Dollars (VIDEO)

In Tuesday’s Forbes Markets Desk video, Investing Editor Matt Schifrin and I discussed the possibility of a $1 trillion market cap for Apple, and whether the iPad-maker is overwhelming the market:

One trillion dollars. A one, followed by twelve zeroes. That’s the market cap Piper Jaffray analyst Gene Munster thinks Apple could have by 2012, compared with the relatively pedestrian $586 billion at which it currently stands.

The prediction, in a note Monday that includes Munster calling for a $1,000 stock price in the next year-plus, is built on a number of assumptions that don’t seem particularly ridiculous. (As for whether the race to be the uber-bull on Apple is itself ridiculous, I’ll defer to Forbes contributor and author of the Reformed Broker blog Josh Brown, who is long the stock and came up with his tongue-in-cheek $2,275 price target from a telephone keypad.)

Munster believes some of the added value will be siphoned off the market caps of competitors like Nokia, Sony, and BlackBerry-maker Research In Motion, among others, with the rest coming from further innovation from the iPhone and iPad maker.

The argument calls for 33 million iPhone sales in the March quarter to be reported April 24 , up 10% from Munster’s previous forecast. Piper Jaffray expects more growth ahead, as devotees continue to show commitment to the device and the appetite for upgrades to newer models. The firm’s fall survey showed 94% of iPhone users plan to stick with the platform for their next smartphone.

The assumption in Munster’s 12-month price target of $910 is 18.6 times his fiscal 2013 earnings forecast of $48.90, richer than the current value being ascribed to Apple shares, but not exactly record-breaking.

Still, there is some concern that Apple shares are already pricing in blockbuster earnings, and merely solid results will not suffice.

Nick Raich, director of research at Key Private Bank, says his firm has reduced its view on Apple to market weight, “taking some chips off the table.” While the short-term may show few roadblocks, the big-picture concern is whether its assembly line of innovative new products falters without Steve Jobs, and competitors catch up. “The moment it can’t be 1-2 years ahead of competitors, it will be commoditized and margins will be killed if it competes on price,” Raich says.

That is not to say such an event is coming anytime soon. “If it keeps beating and raising guidance,” Raich says, there is no reason to think there isn’t more room to run higher.

Something else to watch is the growing nature of Apple as a proxy to beat the broader market, Raich warns. The stock is approaching a 5% weighting in the S&P 500, sitting at 4.5% Tuesday, according to Standard & Poor’s, well ahead of the next largest Exxon Mobil (3.2%), Microsoft (1.9%), IBM (1.9%), Chevron (1.7%) and General Electric (1.7%). Conventional wisdom says the virtually straight-line ascent that has pushed Apple’s stock above $600 and its market cap to nearly $600 billion can’t continue forever, but clearly there has been nothing to push the pause button yet.

Case in point: when investors bailed on most risk assets after the Federal Reserve minutes showed less of an appetite for QE3 Tuesday, Apple was still cruising along with a 1.5% gain as the S&P sank to session lows.

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Apple’s mission has always been the fundamental bettering of the relationship between mankind and their machines. This mission was briefly interrupted by John Sculley but resumed with a vengeance upon Steve Jobs’s return to Apple.

This mission is worth at least $1200 Trillion US.

Look at the history from the Apple II, Apple Lisa, MacIntosh, iMac, iPod, iPhone, and iPad; then you can clearly see Steve Jobs’s, and now Apple Inc.’s mission all along. A few cornerstones must be very firmly implanted: SoC – Apple’s A4, A5, and A6 processors contain the DNA machine instruction sets that form the genes of the Apple ecosystem, genetically controlling the very lifelines of all the hardware prowess, innovations, and capabilities that are impossible to achieve by Apple’s competitions. Siri is organically tied to the iOS forever altering the ways mankind will interface with machines. Next will be the hundreds of Apple specific petaflops+ supercomputers doing things in the iCloud that forever change human civilizations, propelling first USA into a brand new Utopia, and then out to conquer and reshape the world…..would a $1 Trillion market cap be sufficient to achieve this mission?……No, not enough to even get Siri off the ground to fluently verbalize the mankind/machine relationship in sufficient major native natural languages, and then those mothers of all supercomputers in the iCloud…..in time, the world will become parts of the Apple Inc.